Leading Question

How badly will escalating homeowner insurance premiums hurt?

Plenty. With rates roughly doubling in parts of Southwest Florida next year, some people will leave Florida, would-be homebuyers will lose the opportunity to own and outside companies will avoid the state altogether. And as those insurance costs spiral, expect some fallout to hit mortgage lenders, builders, real estate agents and anyone else associated with the housing industry.

Combined with rising energy prices, interest rates and increased home prices, higher insurance rates make for a perfect storm of negative movement in the region's economic well being.

Still, the short-term effects will not devastate the economy.

The recent whammy came in July when State Farm Florida Insurance boosted rates 52.4 percent, on average, across the state. But those numbers are far higher in coastal regions. For example, parts of Collier and Lee counties will see increases of 90-plus percent. Sections of Sarasota and Manatee counties that are close to the Gulf are looking at jumps of more than 100 percent, according to the Florida Office of Insurance Regulation.

Farther inland, rate increases will be slightly less-by 42.6 percent in Lee and 87.3 percent in Collier. In Manatee, the cost bumps up by 73.2 percent and in Sarasota by 79.1 percent. These figures do not include condo or rental structures.

The increases are, of course, the result of two consecutive years of heavy hurricane activity that resulted in more than $38 billion in damage statewide. State Farm ranks first in the number of policies in force across Florida and in Lee, Collier and Charlotte counties. In Sarasota and Manatee, the leader is Citizens Property Insurance, which also raised homeowners' rates by 13.3 percent in 2006 and 23.2 percent in 2005.

The Florida Legislature created Citizens in 2002 to cover policy holders in high-risk locations who are unable to afford coverage from traditional insurers. Deficit-ridden Citizens, which charges the highest premiums in the state, is being bailed out by the Legislature to the tune of roughly $1.7 billion.

Nationwide Insurance Company of Florida, another major carrier, has a 71.4 percent rate hike pending.

TIB Bank has noticed that some consumers are losing out on their chance for home ownership because they can't handle the cost. "We have heard of transactions that have not taken place because of the increases," says Mill Younkers, TIB's Southwest Florida president. "It disqualifies many people because it changes the ratio of income to debt." If we catch a break from the bad weather this year, the premium could drop, he adds.

But the finance industry is not taking the matter in stride. Recently a contingent of 15 Florida bankers traveled to Washington, D.C., to discuss the issue with elected officials. And at Fifth Third Bank, people with good credit may receive help regardless of debt ratio and other factors considered when obtaining a mortgage, says spokeswoman Jama Dock.

So far, the hikes have not been felt in the construction trade, but it's keeping a close watch, says Larry Anderson, executive vice president of the Home Builders Association of Sarasota County. "It can shoot a deal," he says. More worrisome is the possibility that homeowners insurance will become less available as carriers leave the state. "Government has to be aware overall of what [the increases are] doing to the market," he says.

Economist Hank Fishkind of Orlando-based Fishkind and Associates foresees another rate increase next year. That will result in people having to move from their homes. Just as disturbing, people and businesses who are considering a move to Southwest Florida might pass it over in favor of a state with lower insurance rates, he says.

"It's not going to be in great numbers, though," Fishkind says.-Phil Borchmann

RATE HIKES
State Farm Florida Insurance increased rates 52.4 percent across the state; along Sarasota and Manatee coastal areas, those rates jumped more than 100 percent.

BUSINESS CALENDAR

SEPT. 14
Venice Chamber Hob Nob with elected officials and political candidates. 5:30 to 8 p.m. at the Venice Art Center, 326 Nokomis Ave. S., Venice. $15. Call 488-2236.

SEPT. 20
"Wake Up! Venice" breakfast meeting for the Venice Chamber. 7:45 a.m. at Sunset Lake Nursing and Rehabilitation Center, 832 Sunset Lake Blvd., Venice. Free. Call 488-2236.

Greater Sarasota Chamber U Executive Breakfast Series 8 a.m. at Michael's On East, 1212 East Ave. S., Sarasota. $30 in advance or $35 at door for members, $35 to $40 for nonmembers. Call 944-4031 or visit www.sarasotachamber.com.

SEPT. 21
Keep Manatee Beautiful Awards Program 11:30 a.m. to 1 p.m. at Tara Golf & Country Club Clubhouse, 6602 Drewry's Bluff, Bradenton. $10. Call 795-8272 or e-mail keep@manateebeautiful.com.